Physician employment agreements and practice sale documents use terms most physicians never saw in training. This glossary explains the ones that come up most often in our reviews and transactions, with links to our deeper articles on each topic.
The physician-work component of the relative value units Medicare assigns to each service under the Resource-Based Relative Value Scale. Many employers pay productivity compensation per wRVU, so the number of wRVUs you generate drives your pay.
Read more: RVU Compensation for Physicians
The dollar amount your contract pays per wRVU, for example a set rate per wRVU above a threshold. It is set by your contract, not by Medicare's own conversion factor, and is one of the most negotiable numbers in a productivity model.
Read more: How Physician Compensation Really Works
The wRVU volume you must exceed before productivity pay starts. A threshold set too high can mean little or no bonus despite a full schedule.
A period, often the first one or two years, during which base salary is guaranteed regardless of production. Check what happens to pay when it ends and whether any shortfall must be repaid.
Separate compensation for taking call beyond a stated baseline.
Read more: Physician Call Pay Contract Terms
A signing payment that usually must be repaid, often prorated, if you leave or are terminated before a set date. Check whether repayment applies if the employer terminates you without cause.
Read more: Physician Sign-On Bonus Repayment
Money for moving expenses, usually with its own repayment terms.
Read more: Physician Relocation Bonus Agreement
Malpractice insurance that covers a claim only if the policy is in force both when the incident occurred and when the claim is made. When the policy ends, you need tail or nose coverage to stay protected.
Malpractice insurance that covers incidents occurring during the policy period no matter when the claim is filed. No tail is needed.
Coverage purchased when a claims-made policy ends that protects you against claims made later for incidents during the policy period. Tail can be expensive, so your contract should say who pays.
Coverage under your new employer's claims-made policy for incidents from your prior job. It can replace the need to buy tail from your old carrier.
A clause limiting where and for how long you can practice after leaving. Key terms are the radius, the duration, and whether the radius runs from one site or every location the employer operates. Enforceability varies significantly by state, and some states limit or prohibit physician non-competes.
Read more: Physician Non-Compete Clauses; Restrictive Covenants for Physicians; Non-Competes After Selling a Medical Practice
A clause limiting your ability to solicit patients or staff after you leave. Check how "solicit" is defined and whether it restricts patients who seek you out.
The right of either party to end the agreement without a reason after giving notice. Check notice length, whether it is mutual, and how it interacts with your non-compete, tail, and bonus repayment.
Read more: Termination Without Cause in a Physician Contract
Termination for listed reasons such as losing your license. A cure period gives you time to fix a curable problem before termination takes effect.
A fixed amount you agree to pay for a specific breach, such as violating a non-compete, instead of the employer proving actual damages.
The price and terms for becoming an owner of a practice, often paid over time or through reduced compensation.
Read more: Physician Partnership Buy-In Agreement
In an asset sale the buyer purchases selected practice assets. In a stock (or equity) sale the buyer purchases the owners' interest in the entity, including its history and liabilities. The structure affects taxes, liability, and contract assignment.
Read more: Selling a Medical Practice: The Complete Legal Guide
A summary of the main deal terms signed before definitive documents. Most terms are usually non-binding, but exclusivity and confidentiality provisions often are binding.
Read more: Letters of Intent When Selling a Medical Practice; LOI Review
Earnings before interest, taxes, depreciation, and amortization. Normalized EBITDA adjusts for owner compensation and one-time items and is often the base for valuation multiples in private equity deals.
Read more: Medical Practice Valuation Methods
An accounting review, often commissioned by the buyer, that tests whether reported earnings are reliable. Findings frequently lead to price renegotiation.
The portion of a seller's proceeds reinvested in the buyer's company instead of paid in cash. Its value depends on the buyer's future performance and later sale.
Read more: Rollover Equity: What Physicians Should Know; Selling Your Practice to Private Equity
Part of the purchase price paid later only if the practice meets set performance targets after closing.
Part of the purchase price held back after closing to cover indemnification claims.
Statements the seller makes about the practice, and the seller's obligation to compensate the buyer if those statements prove false or certain liabilities arise.
A tax structuring technique, named for Internal Revenue Code section 368(a)(1)(F), often used when the selling practice is an S corporation. It can let a buyer receive asset purchase tax treatment while the practice entity's contracts and identifiers carry over. It requires coordination with a tax advisor.
Read more: F Reorganizations in a Medical Practice Sale
A company that provides non-clinical services such as billing, staffing, and administration to a medical practice under a management services agreement. Private equity often invests through MSOs.
Read more: What Is an MSO?
A doctrine in many states that restricts non-physicians or lay corporations from owning medical practices, employing physicians, or controlling clinical decisions. Rules vary widely by state and shape how private equity deals are structured.
Read more: The Corporate Practice of Medicine in a Practice Sale
A physician-owned professional corporation that contracts with an MSO, used to structure investment in states with CPOM restrictions.
Read more: The Corporate Practice of Medicine in a Practice Sale
The employment contract a selling physician signs with the buyer at closing. It sets compensation, term, termination rights, and often a second non-compete, and can matter as much as the purchase price.
Read more: Your Employment Agreement After Selling Your Practice
Standards that physician compensation and many practice transactions must meet under federal fraud and abuse laws.
Read more: Stark Law and the Anti-Kickback Statute in a Practice Sale
The federal physician self-referral law. It generally prohibits a physician from referring Medicare patients for certain designated health services to an entity with which the physician has a financial relationship, unless an exception applies.
Read more: Stark Law and the Anti-Kickback Statute in a Practice Sale
A federal criminal law prohibiting knowingly and willfully offering, paying, soliciting, or receiving anything of value to induce or reward referrals of business payable by federal health care programs.
Read more: Stark Law and the Anti-Kickback Statute in a Practice Sale
Not sure what a term means in your contract or deal documents? Consultations are free for physician contracts and for physicians buying or selling a practice.
Book a Free ConsultationThis glossary is general information, not legal advice. How a term works in your contract depends on its exact wording and the law of your state.